Robert Solow

The steady state is the level at which investment per worker is just sufficient to offset depreciation and changes in the workforce. At that point, capital per effective worker stops rising unless saving, population growth, depreciation, or technology changes.

A higher saving rate raises the economy's long-run level of capital and output per worker, but diminishing returns eventually reduce the added gain from each unit of capital. Sustained growth in output per worker therefore depends on continuing technological progress in the standard model.

The Solow residual is the portion of output growth not explained by measured growth in capital and labor inputs. It is often interpreted as total factor productivity, although it can also absorb measurement errors and omitted influences.

Solow received the 1987 Nobel Memorial Prize in Economic Sciences for his contributions to the theory of economic growth. His work separated the effects of capital accumulation from the long-run role assigned to technological change.